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Hello
I recently registered five limited companies and they were rejected by banks for bank account. That means losing clients for us.
Can anyone advise any bank which can open limited company account for contractors with less or without credit check. I have spoken to cater Allen but they also do the credit check.

As I do not assist with the opening of UK accounts my thoughts are both general and a few years out of date!

1. Disclosure. Before introducing a client to Bank X, try and second guess their criteria. Ask clients if they have a poor credit history. Tell the banks BEFORE bring/sending the client (to get an acceptance in principle). As part of this you should pre-complete the application form with the client (or at least get them to answer the bank's standard questions) so you can select WHICH bank to go to. (also see charging, below)

2. Relationship. Try to deal with one or more business banking centres/branches and get to know the manager's likes/dislikes. If for example HSBC never opens accounts where a party to the account has a CCJ, then don't waste the client's time (or yours) applying. In the past, I found suburban/small town branches were far easier than London branches for "difficult" clients.

3. Be devious. If a client has a really awful credit record, get the wife/mistress or whatever to front the company (as sole signatory) and privately explain to the relationship manager at the bank that this is what you are proposing.

4. Charge. We open accounts for clients at banks all over the world (ex-UK/USA) . We know pretty well what is acceptable to the banks and, for borderline cases, we ensure we collect our fees before starting work and tell the client that our fee is NOT for opening the account, but for our time/assistance. I realise your client base is very different to mine, but in "Bad credit" cases tell the client "You may be turned down, we're going to have to run around with this one, Our fee will be £xxx".

All the banks will carry out credit checks. Some, like HSBC, won't open accounts for anyone with a CCJ on their credit history. Others, like Barclays, will open the account provided no credit is involved.

My recent experience suggests James Hellyer's response is closest to the mark.

Banks appear to have procedures which are adhered to slavishly even going so far as to "blocking" applications submitted by their own (sympathetic) managers.

The one situation where their procedures are relaxed - slightly - is where applicants are "new starters". In order to avoid a chicken-&-egg situation where new businesses could not begin because they do not have banking facilities and (probably more to the point) banks would choke-off their source of future customers - "basic" current accounts are offered - provided no credit-check-type-obstacles emerge. Beyond this, if facilities such as overdrafts are required, then the normal procedures and credit checking criteria are applied.

In the absence of more specific information, Peter Saxton's question regarding the "kind of clients" is certainly pertinent.

Some of the clients had CCJ and some poor credit history. It annoys me whey HSBC declines the basic business bank account when they do not offer any overdraft or credit card. I have been referring clients to HSBC but now I screen clients before referring to them.

James you are absolutely right about Barclays. That's what we are doing at the moment.

There are some accounts that I know who have special arrangements with banks like Cater Allen bank and Credecard (subsidiary of RBS i suppose). Couple of my clients with CCJ got account with them through one of our competitors. The only thing they needed was attestation by the accountant. I have personally worked in one of the contractor accountants doing the same practice. Unfortunately we are not in a position to pass their criteria of 3 Million Pounds business before they can give us waiver ship.

This website is my first proper website and a serious effort to get business through the website. The website is to attract individuals and contractors hence why you see graphics.

I do appreciate any suggestion regarding my website in a constructive way and I also understand that its not the perfect website and may need improvement in certain areas. The news section is not ready it, therefore I am making reference to AW. Meeting tomorrow with a guy from informanagement to discuss news section and monthly newsletter.

Having read the references to the website of accountsdirect, I had a look at both his website and that of petersaxton. They could not be more different : -

accountsdirect is fairly "modern" with "news" (with links back to AW), newsfeeds, downloads etc. The site is not particularly to my taste (generic photos of "busy people in busy offices" with all the girls in their 20's) but each to his own, and anyway I am not a potential client. If it generates business, it serves it's purpose.

petersaxton by contrast has the plainest site I have ever seen (black on white, no graphics), and just 4 paragraphs about his firm plus a listing of practice areas (and biographies). I rather suspect that Mr Saxton doesn't seek new business from his site, but rather has it in much the same way that most of us had box ads in Yellow Pages ie primarily to confirm one's presence, but without expecting cold calls.

... and my point being that the words "apples & pears" spring to mind. The sites are (I suppose) setting out to achieve very different things; however, I can't really agree that scrolling news items might "excite the less intelligent"!

I will no doubt be shot down in flames (and my own site denigrated to boot) but I do think that this went a step further than simply going off-topic, and I wonder whether it was either fair or relevant. Yes, accountsdirect asked, and petersaxton answered "why", but still ...

I set my website up a long time ago when I got free web space with my internet connection. I thought I'd knock something up and then do a proper one when I got time. I've got lots of ideas but never had the time. I do get enquiries, about one a week but before the recession I was getting one a day. I know it's a poor website but I hate websites with flashy graphics and "pro active accountants offering a personal service".

... but I hate websites with flashy graphics and "pro active accountants offering a personal service".

I couldn't agree more! It's marketing rubbish and it's what web designers will tell you to do (I have an in-house designer for our 6 sites, so I don't do as she advises - I pay her, not the other way round!).

My point though is that it is, as I said, apples and pears. If Accountsdirect is a new(ish) firm he needs to attract new clients (even if some are poor quality which I guess is a racing certainty if one aims at the construction industry). As he's already told us, it's his first effort (and not bad for all that!) and over time he'll change certain phrases or graphic choices ... or not.

I hope my post directly above gives him some pointers as to how to deal with the (nightmare) UK banks, but my most important suggestion is that he should not bundle account opening in with a general accounts package. It should be a chargeable tariff item - at a rate that truly represents his time! I'm old fashioned and everything I do is time based even if it has a "fixed fee" wrapper ... When the banks generally became more "difficult" we, over 2 or 3 years, doubled our fee reflecting the increased time spent as per our internal time sheets.

Send your clients to Natwest. They offer a business banking product for PSC's where the director has a bad credit history. They get no overdraft facility, and no credit card (but do get a Debit card) - but its a business bank account all the same. Its called a Foundation Account.

Thanks GregThanks you Greg. Yes I knew a business manager in natwest who used to open accounts for clients with bad credit history. Spoke to him again and he also mentioned of foundation account. I have referred one client to him and they are processing her application.

For rest of four clients I appointed their spouses as directors and terminated their directorship and all of them got bank accounts. I have added them again as directors. Now they are eligible to work through limited companies but can't be signatory to the bank account. Less attractive but this was the only option until I heard of natwest.

Santander ProblemsI'm with Santander, and the same-day payment system has a very low monetary limit. Can't remember how much, but something like £1k or less, and it is not free if you have less than £1k going in each month. It always had a premium-rate help line number too, but not sure if it still does.

Santander still give 12 months free banking to new businesses, or if you have a personal account with them it's 18 months. After that you go onto a flat rate monthly tariff, if you need to deposit £1000 or less in cash per month it's £7.50, up to £3,000 it's £12 and up to £5000 it's £20. That is cash though, the monthly fee covers all other standard transactions.

Accountsdirect, Peter S and Hansa, it doesn't matter what you like to see on a web site, it's what your prospective clients like that counts. If the purpose of your site is to get more leads and if flashy gets you more leads than plain, use flashy. If plain triumphs, stick with plain.

I actually said in A bit below the belt perhaps! : - "If it generates business, it serves it's purpose." I see nothing in those words that suggests anything different to what you have, in essence, said.

Now MY turn to go "off topic". I have noticed a tendency, especially among certain regular contributors, to (deliberately?) misread and/or selectively quote from or refer to other peoples posts in such a way as to distort the overall point of that post. With respect, it is both irritating and, I respectfully suggest, poor manners.

The post (mine) you were referring to is actually defending the OP against comments made by another contributor (PeterSaxton) who said "Do you think your website is attracting the wrong kind of clients?". (a comment you did not refer to I note).

In order to be fair to both I looked at both sites and gave my thoughts on each ending with (in the case of accountsdirect) with the words underlined above.

Recently had a new limited company client turned down for a bank account due to poor credit history of the Directors. A bank employee suggested appointing one of the director's sons as a new director and resigning the existing ones. They did this, the bank account was duly opened and now the old directors have been reappointed. Unbelievable!

Re BSSRoberts - I too have experienced this phenomenon and was told by the bank in question on enquiry that the initial account opening involves the establishing of several "relationships", whereas changing a signatory or officer involves only one.

Therefore at the bank's end (a) there are fewer boxes to tick and (b) as the principle relationship (with the company) is already established the bank might find itself in some difficulty in justifying the refusal to accept a later appointed director/signatory.

This was one of the reasons I suggested in an earlier post that, where difficulties are anticipated, someone more 'acceptable' to the bank might 'front' the application

Re BSSRoberts and HansaI did the same practice of adding more acceptable person as director (although not advised by bank manager) and they got the accounts. I refer my clients to HSBC, they give £50 referral bonus per client and mostly £1000 commercial card to clients as well. It's an embarrassing situation for the bank manager as well when the account is declined but because of the system's credit check ( which they don't have any control on) it is not possible for them to accept the account. That's why in Robert's case the bank manager was probably trying to help and look for alternative.

Hansa I am extremely thankful to you for your contribution to the post and also other people that took the time to write comments. The post is about opening a bank account and petersaxton comments about the website were out of context and surprised me.

"The post is about opening a bank account and petersaxton comments about the website were out of context and surprised me."

I know it would have surprised you - that's why I commented. It would appear that you have new clients who are less credit worthy than those of other accountants. How do you obtain these clients? If it's through your website you may want to consider what you can change on your website or at least carry out checks on their creditworthiness. You could always ask for cash upfront.

I would always consider every possibility and not be too limited in context when it comes to solving problems. You are obviously quite at liberty to take a different approach.

Look at your website and think about the graphics. I am guessing the people in the graphics, and even the pen and calculator, are not based in your office. Why show them? My view, and I would suspect it is a similar view of most clients, is that they would feel more reassured if they could see photos and profiles/biographies of you and your staff. I look at a lot of websites and whenever I see a lot of photos and profiles I tend to think that the firm has nothing to hide and I also feel a certain empathy - like I could work with these people. A photo of the exterior of the office helps. If I see graphics of "models" and objects I am more likely to think: "What have they got to hide?". I'm not saying my website is better - far from it - but this is about your opening bank account problems > quality of clients > quality of website. You may stop at bank account and try to resolve it from that but I don't think that's a good idea.

Peter, you got to understand that we are dealing with contractors. Our audience is not someone running a business but doctors, social workers and IT contractors who most of the time although expert in their own fields are strangers to the limited company and different tax options. I would like to know on what basis do you rank a client 'a quality client'. Every contractor whether earning 40K or 250K is a quality client for us as long as they are paying our fees and abide by the terms of engagement. Please look at the websites of some of the top companies in contracting.

Do they have anything to hide by loading their websites with graphics? No absolutely not. Let me solve your problem. Please have a look at the PWC website http://www.pwc.co.uk/. I am sure you would be able to see pictures and graphics.

Opening bank account has nothing to do with the quality of client in most cases. Many of my clients specially medical consultants come to UK from abroad with zero credit history. One of my friend who has a recruitment company of a turnover of 750000 Pounds was declined by HSBC because he had issues with his mobile company and didn't pay the bill.

Many of my clients specially medical consultants come to UK from abroad with zero credit history.

One of my friend who has a recruitment company of a turnover of 750000 Pounds was declined by HSBC because he had issues with his mobile company and didn't pay the bill.

I can do no better than quote from an earlier post by the OP where two such examples are given. The first had no credit history with very good reason. The second defaulted on a bill he disputed.

A "NatWest Foundation" account would probably have been fine for both and the bank has negligible risk.

By comparison (albeit in the USA) Mr Bernie Madoff could have had accounts with any private banker he wanted to up until 2009, yet took his clients down for $18,000,000,000 (excluding fabricated gains). In retrospect who was the worse risk?

I think a quality client is somebody who gives you data quick, answers emails quickly and pays their bills quick. If a client is willing to pay more for the same level of work then they are a more quality client although I tend to charge clients the same for the same work.

What on earth has a credit history got to do with a new account where no overdraft and no credit card is required or requested?

... No don't answer that please. In my view, there is an unhealthy obsession (by UK banks among others) in wanting to credit score the most mundane of requests despite the fact that no credit is required (or ever likely to be).

We open corporate accounts all over the world for clients on ID & company docs only, with evidence of home address rarely requested. Such accounts rarely offer credit in any form (credit cards generally require a blocked deposit for example), but they serve their purpose.

Unfortunately, none of these banks are in the Sterling area which makes them expensive to operate within the UK. However a couple of people have mentioned NatWest's "Foundation account" ... fits the bill exactly I would have thought.

"What on earth has a credit history got to do with a new account where no overdraft and no credit card is required or requested?"

This is what Lloyds TSB says:

When you apply for an account with us, we’ll carry out some standard credit checks. We can still open an account for you if you have a poor credit history. But, if your credit reference agency file shows that you have a history of fraud or are an undischarged bankrupt, we won’t be able to accept your application.

"In my view, there is an unhealthy obsession (by UK banks among others) in wanting to credit score the most mundane of requests despite the fact that no credit is required (or ever likely to be)."

You don't seem to be considering that a bank wants to know something about their customers. You may not be wanting credit but if you have a history of fraud or are an undischarged bankrupt then the bank may be taking a risk unless they know who you are. If the bank can't find out anything about you they don't know who you are. A passport only provides a name and a date of birth but presumably there can be many people who could have the same name and it is easy enough to get a false passport. This is why people prefer to have information from various sources.

Bankruptcy & fraud are very different beasts to (say) getting into a dispute with a mobile phone company and ending up with a "default" showing against your name on a credit file. Both of these events (particularly bankruptcy) can be checked fairly easily without a full "Experian" check (which itself, I don't think, lists convictions).

I quite agree that Lloyds explanation seems eminently reasonable until you realise that they probably also won't take customers on who are neither fraudsters or bankrupts, yet have a black mark on their file possibly in respect of something they vehemently dispute and maybe some years before.

In fact, the fact of being a bankrupt does NOT legally prevent one having a bank account - although of course credit above £500 may not be obtained without telling the prospective lender and one cannot be a director of (or exercise management control over) a limited company.

How many of the OP's clients fall into the category of "bankrupt or fraudster"? Very few I imagine. Next stage will perhaps be DNA samples & a lie detector test ... Brrr no thanks. As I said in the heading, odd that banks in most of the rest of the world get by without this presumption that all potential customers are bankrupts or fraudsters.

False passports? to open a small contractors bank account? Now I think we are entering the realms of fantasy!